New York Begins Accepting Medical Marijuana Applications

New York State has begun accepting applications for its medical marijuana licenses this week. Applicants can submit questions through May 5th and the Department of Health Services (DOH) must answer those questions by May 14th. The deadline for filing an application is May 29th. The nonrefundable application fee is $10,000 and the registration fee is $200,000.The approved applicants will be announced some time in July.

Only five applicants will be approved to cultivate and dispense approved medical marijuana and they are each limited to four dispensaries. This is where things get a little challenging for the approved licensees. The dispensaries must be geographically dispensed or located in multiple counties across the state, but not in counties that are neighboring or in close proximity. So if you choose New York County, which includes Manhattan and the boroughs, be prepared to give up the suburbs of Westchester or Long Island's Nassau county. There will be no delivery services unless the DOH provides prior written approval.

New York Assemblyman Richard Gottfried, D-Manhattan, right, speaks at a news conference held by advocates of emergency access to medical marijuana at the Capitol in Albany, N.Y., on Tuesday, April 28, 2015. With Gottfried are Assembly Minority Leader Brian Kolb, R-Geneva, left, Mackenzie Kulawy, 12, second from left, and her sister Kaitlyn Kulawy, 14, of Utica. Patients who urged lawmakers to create a medical marijuana program in New York are now calling for emergency access to the drug now, since the regulations governing the distribution of medical cannabis are likely a year away. They blame Gov. Andrew Cuomo for not taking steps to expedite access for children with debilitating neurological conditions. (AP Photo/Tim Roske)

According to the statute, these approved licensees had better be ready to hit the ground running as the implementation date for the program is January 5, 2016. Even if a business is approved and licensed, it will need to secure a location and get local approval before building the facility. David Lipton Managing Director of Advanced Grow Labs already operates such a business in Connecticut and plans to apply for a license in New York. “If you go about it the right way, a town in New York may be receptive,” said Lipton. “A lot of people will apply in New York and there's lot of money, but it's hard to do.”

However, even if a seasoned medical marijuana business gets approved and maybe even leased a potential building or bought one in anticipation, the build-out takes months. Then it will take another several months to begin cultivating product before it can be dispensed. January 5th looks pretty aggressive by any time table.

When it comes to the actual product, the approved licensees will be limited to five brands of medical marijuana and the DOH will set the price for the product. According to the DOH, “The Commissioner must set the price per dose for each form of medical marijuana sold by any registered organization, and must take into account the fixed and variable costs of producing the form of marijuana in approving such price.” A patient's income will not be factored into the cost, but the Commissioner could authorize a charity program offered by a registered organization.

Patients will need certification from a registered practitioner, but the DOH has not begun the process for registering the practitioners or the patients yet. Most companies that are applying for licenses in New York are aware that they will need to be prepared for at least two years of losses. The restrictive nature of the New York program will limit the patient population and the dispensary locations.

However, most of these companies are looking at New York as a long term investment. “The license is not valuable because of its short term cash flow. It's valuable because it's a long term asset,” said Adam Bierman of MedMen a cannabis consulting firm. “Most people that get these five licenses will figure out how to to stay in power thereafter.”